Giant slashes production costs

Coincidentally, the company has been put up for sale by its Australian parent.

Giant said its third-quarter minesite costs were $378(C) per oz at Timmins, Ont., and $363 at Yellowknife, N.W.T., compared with 1988 averages of $600 and $549, respectively.

“I don’t see it as a flash in the pan,” President Adrian Fleming said of the declining costs in an interview with The Northern Miner. “I expect it to continue.”

Fleming, a native of Australia, has made a number of changes to the company since taking over the presidency in 1988. Instead of maximizing tonnage to the mill, the company policy is now to maximize revenue per ton. “We wanted to make $100 on every ounce,” Fleming said.

In the Timmins area, the changes included closing down the old Schumacher mill (the cleanup of the mill netted the company some “lost” gold production) and ceasing underground operations at the Schumacher mine, and selling the Ross mine which was becoming an expensive operation because of mill transportation costs. The company’s only conventional area milling facility is the Pamour mill.

Because of the changes, annual production at the Timmins conventional operations has dropped from about 115,000 oz annually to 90,000 oz. (During the first nine months of 1989, output from those conventional operations totalled 70,923 oz.)

Layoffs were also incurred. The Timmins workforce was reduced from about 700 workers to 400, resulting in a halving of the operating costs.

At Yellowknife, the turnaround has not been as dramatic but the efficiency of the underground mining operations has been improved, Fleming said.

Construction of a ramp to service the underground workings of the Giant mine is almost complete, he said. The ventilation has been improved and the air compression system upgraded. Also, a team approach for underground workers has been established, with a maintenance man attached to each crew.

Production at the Giant mine is expected to total about 80,000 oz this year, up from almost 63,000 oz in 1988. (During the first nine months of 1989, the mine turned out 61,417 oz.)

The company has also hired a management consulting firm to help improve in areas such as planning, systems and motivation at both camps, Fleming said.

On the exploration side, Giant and the other companies in the Pamour group are this year spending about $5 million in total, Fleming said. At Yellowknife, both underground and surface drilling are under way. The surface program is testing an area below current mine workings.

And at Timmins, where Giant has extensive land holdings, a small zone of pittable mineralization to the east of the Pamour No 1 mine, with values well above current pit grades in the area, has been identified. The zone may be ready to supply feed early in 1990.

As well, the group’s exploration arm, Pamorex Minerals (TSE), is active in Ontario, the Northwest Territories and in Nevada in the U.S.

The reductions in costs and the exploration programs at both camps have management believing the turnarounds are permanent. “We’re confident these lower levels of production costs can be maintained,” Fleming said.

Debt problems in Australia recently forced the parent of Giant Yellowknife and the other Pamour group companies to place its Canadian mining assets up for sale. To that end, Giant Resources of Sydney entered into a letter of intent to sell the assets to Frame Mining of Toronto or its nominee.

Owner of Frame Mining is Clifford Frame, a former president of Pamour Inc. (TSE). Frame is also chairman of lead-zinc-silver producer Curragh Resources, in which Giant Resources has a 43.7% interest.

An agreement covering the sale was to have been completed by Nov 26, but additional time was requested by Frame Mining to complete its due diligence.

It is believed that while Frame Mining wishes to acquire the Curragh interest of Giant Resources, the Toronto company has been trying to find a buyer for the other Canadian assets.

Giant Resources has a 67.5% interest in Pamour, which has been turned into a holding company. Giant Resources and Pamour combined have a 58.5% interest in Giant Yellowknife.

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